(Source: Business Wire)
ACE Limited (NYSE:ACE) today reported net income for the quarter ended June 30, 2009, of $1.58 per share, compared with $2.18 per share for the same quarter last year.(1) Income excluding net realized gains (losses) was $2.09 per share, compared with $2.16 per share.(2) Adjusted for foreign exchange, income excluding net realized gains (losses) was $2.09 per share, compared with $2.08 per share.(2) Net realized and unrealized gains after tax were $1 billion. Book value increased $1.8 billion, up 12% from March 31, 2009. Annualized return on average equity was 18%.(3) The property and casualty (P&C) combined ratio was 87.7%.
Second Quarter Summary (in millions, except per share amounts) (Unaudited) (Per Share - Diluted) 2009 2008 Change 2009 2008 Change Net income $ 535 $ 746 (28 )% $ 1.58 $ 2.18 (28 )% Net realized gains (losses), net of tax $ (171 ) $ 8 - $ (0.51 ) $ 0.02 - Income excluding net realized gains (losses), net of tax ((2)) $ 706 $ 738 (4 )% $ 2.09 $ 2.16 (3 )% Income excluding net realized gains (losses), net of tax, adjusted for foreign exchange $ 706 $ 699 1 % $ 2.09 $ 2.08 - -------------------------------------------------------------------------------
Net income for the six months ended June 30, 2009, was $3.27 per share, compared with $3.29 per share for 2008. For the six months ended June 30, 2009, income excluding net realized gains (losses) was $4.08 per share, compared with $4.31 per share for 2008. The P&C combined ratio for the six months ended June 30, 2009, was 87.6%. Book value increased $2.1 billion, up 14% during the six months ended June 30, 2009.
Six Months Summary (in millions, except per share amounts) (Unaudited) (Per Share - Diluted) 2009 2008 Change 2009 2008 Change Net income $ 1,102 $ 1,123 (2 )% $ 3.27 $ 3.29 (1 )% Net realized gains (losses), net of tax $ (273 ) $ (340 ) - $ (0.81 ) $ (1.02 ) - Income excluding net realized gains (losses), net of tax $ 1,375 $ 1,463 (6 )% $ 4.08 $ 4.31 (5 )% Income excluding net realized gains (losses), net of tax, adjusted for foreign exchange $ 1,375 $ 1,395 (1 )% $ 4.08 $ 4.17 (2 )% -------------------------------------------------------------------------------
Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, stated: "ACE had a very good second quarter and an excellent first half. Book value increased $1.8 billion or 12% in the quarter, benefiting from improved financial market conditions and strong earnings. Book value is now up 14% year to date, recovering completely from losses suffered during the financial market stress in the second half of last year. In the quarter we produced after-tax operating income of $706 million, our return on equity was 18% and our P&C combined ratio was 87.7%.
"Recession, a strong U.S. dollar and a competitive pricing environment impacted premium growth. For our portfolio of business, rates continued to firm and a number of our divisions benefited such as our ACE Tempest Re reinsurance franchise, where net premiums grew over 20% in the quarter. Moreover, many of our retail P&C insurance lines around the world experienced good growth as a result of continued customer flight to safety.
"We remain cautious given current economic and financial market conditions, but we are aggressively focused on execution, and we continue to make investments to expand our capabilities for the future. We are well positioned to build market share as insurance markets improve and economic growth slowly recovers."
Other operating highlights for the quarter ended June 30, 2009, were as follows (1):
Net P&C premiums written and earned, which include international accident and health (A&H), decreased 5%. Excluding the impact of foreign exchange, net P&C premiums written and earned increased 1% and 2%, respectively.
The P&C combined ratio for the quarter was 87.7% compared with 87.8%.
Prior period favorable development was $158 million compared with $104 million in 2008.
P&C pre-tax underwriting income decreased 5% to $355 million compared with $373 million. Adjusting for the impact of foreign exchange, P&C pre-tax underwriting income increased 3%.
The P&C expense ratio increased by 0.2 percentage points. Excluding A&H, the P&C expense ratio decreased 0.4 percentage points.
Operating cash flow was $760 million.
Net loss reserves increased $192 million, excluding foreign exchange valuation.
Net investment income decreased 5% to $506 million. Invested assets increased 6% to $43.7 billion.
Return on average equity was 18%.(3)
Book value per share(4) increased 12% from $43.82 at March 31, 2009, to $49.27, while it increased 14% from December 31, 2008.
Net realized and unrealized gains after tax from our investment portfolio totaled approximately $1 billion. This includes $1.2 billion of unrealized gains and $179 million of realized losses. Net realized gains from derivative accounting related to the guaranteed minimum income benefits (GMIBs) of our life reinsurance business, net of associated hedges, were approximately $103 million.
